Q2 2012 St. Louis, Missouri Industrial Market Trends

Occupancy continued to improve in the 133-million-square-foot St. Louis warehouse/ distribution market in the second quarter of 2012, as 378,000 square feet of positive net absorption pushed the vacancy rate down 30 basis points to 14.0%. There was little change in July, and Reis predicts the rate will end 2012 at 14.0% as well. Net absorption had totaled 1.5 million square feet in 2011, and Reis predicts a total of 1.2 million in 2012, with nearly 1 million already in the books by mid-year. Reis predicts annual net absorption will remain strong through 2016, as the vacancy rate edges down toward 13.0% despite revived new supply.

In the second quarter the average asking rent rose 0.3% to $3.69 psf, while the average effective rent increased 0.6% to just $3.40 psf. The first quarter gains had been identical. The year-over-year gains were 0.3% and 0.9%, respectively, but the effective average slipped 0.3% in July. For 2012 as a whole, Reis predicts average rent increases at 1.4% asking and 2.1% effective. Subsequent years are expected to see gains of 2.0% to 3.0%.

In the 11.7-million-square-foot Flex/R&D market, the vacancy rate decreased 50 basis points in the second quarter to 20.2%, as both the average asking rent and the average effective rent were unchanged at $6.94 psf and $6.38 psf, respectively. In July, the vacancy rate fell another 50 basis points as rents were again unchanged. Reis predicts a setback for occupancy by year-end, with the vacancy rate rising to 20.3%. The asking and effective averages are forecast to rise 1.0% and 1.4% this year, with similar or slightly larger increases in the years to follow. The vacancy rate is forecast to remain above 19.0% through 2016.

Cassidy Turley reports a vacancy rate of 8.9% and an effective rent of $3.45 psf in metro St. Louis. “The St. Louis Industrial market has shown marginal growth through the first half of 2012,” according to this source.